Banks expected to be approved for TARP repayment

That’s the news of the day. Ten banks, including Morgan Stanley, are expected to receive approval to repay the TARP money they have received from the government. Last month, nine banks were cleared from the requirement to raise further capital to meet the 4% tier 1 capital ratio that was required by the Treasury. However, apart from these nine, Morgan Stanley will also be one that is expected to be approved for repayment. The bank headed by John Mack was assessed by the stress tests to be in need of $1.8bn additional capital. But going into the capital markets, it raised way beyond the requirement at above $8bn in debt and equity.

The Treasury is preparing to announce today it will let 10 banks buy back government shares, people familiar with the matter said, signaling confidence some of the largest U.S. lenders won’t again need a taxpayer rescue.

JPMorgan Chase & Co. is among those cleared to repay Troubled Asset Relief Program funds, a person said on condition of anonymity. Goldman Sachs Group Inc., American Express Co. and State Street Corp. are also among those that have sold shares and debt unguaranteed by the government, demonstrating they can raise funds without federal aid.

This comes a day after capital-raising plans of the 10 banks identified to be lacking capital by the stress test have been approved.